NEW YORK (CNNfn) - Amazon.com issued pink slips to 150 employees Friday, marking the first time the online retailer has used mass layoffs to cut costs.|
The cuts, which amount to about 2 percent of Amazon's worldwide payroll, mostly affect employees at the company's headquarters in Seattle.
Amazon (AMZN: Research, Estimates) spokesman Bill Curry said the cuts
are part of an organizational review of the company's operations and not a reflection of slower sales.
"This has everything to do with making sure we have people who have the skills to carry out our mission," said Curry. "It does not signal any change in our strategy."
Amazon stock slides
Shares of Amazon fell sharply Friday but it was not clear if the drop was tied to the cutbacks or part of a broader decline in technology stocks. By late-afternoon, Amazon was down 5-11/16 to 61-1/4 on volume of more than 10 million shares. The Nasdaq composite, meanwhile, was down more than 181 points to 3,858 in active trade.
Forrester Research e-commerce analyst Seema Williams said Amazon may be struggling to keep momentum going after the blockbuster holiday season.
"This is part of the post-holiday sales fallout," Williams said. "Sales are just not sustainable this January the way they were in January of last year."
Amazon will release fourth-quarter earnings on Feb. 2. Analysts polled by earnings-tracker First Call expect the company to post a loss of 48 cents a share.
Ken Cassar, an electronic commerce analyst at Jupiter Communications, said the move may be part of a proactive strategy by Amazon to convince Wall Street that it is trying to keep costs under control.
"Amazon is getting slammed - eToys yesterday - for playing the game that Wall Street used to reward them for playing," Cassar said. "They rack up significant losses in the name of market share. We may be seeing the froth around these e-commerce companies dissipating."
"My guess is that Amazon has seen the writing on the wall," said Cassar. "They think they'll get slammed next week when they release their quarterly report and they're trying to cut their losses by telling the Street they're taking measures to control costs."
"When you get this kind of selling off, the negativity points to the sector -e-commerce - falling out of favor," Cassar said.
'Cut them some slack'
However, First Union's David Trossman thought Amazon's cuts were not a major issue.
"These guys have grown very quickly and business models shift and evolve in the business world," Trossman said. "It's hard to assign anything dramatic to the stock drop. If you asked Amazon a year ago whether they thought they'd have 16 million customers, I'm sure they wouldn't have known; they're evolving. They should be cut some slack."
Amazon employs 7,500 workers, with seven locations in the United States and operations in Europe.